Dag Wiese Schartum og Anne Gunn B. Bekken (red.) YULEX 2012

(1)

Yulex 2012

Dag Wiese Schartum og Anne Gunn B. Bekken (red.)

YULEX 2012

Senter for rettsinformatikk Avdeling for forvaltningsinformatikk

Postboks 6706 St Olavs plass 0130 Oslo

(2)

Henvendelser om denne bok kan gjøres til:

Senter for rettsinformatikk Postboks 6706 St. Olavs plass 0130 Oslo

Tlf. 22 85 01 01 www. jus.uio.no/iri/

ISBN 9788272261428 ISSN 0806-1912

Utgitt i samarbeid med Akademika forlag Trykk: AIT Oslo AS

Omslagsdesign: Kitty Ensby

(3)

FORORD

2012 har vært et godt år. Noe av det mest gledelige som har skjedd i året som gikk er at to nye stipendiater har begynt avhandlingsarbeidene sine. Kevin McGillivray skal skrive om ”Cloud computing — the use of contracts as a means of governing networked computer services» og Darren Reads emne er nettverksnøytralitet. Samtidig som vi kan ønske unge lovende forskere lykke til, kan vi gratulere Arild Jansen med opprykk til professor. Selv om professor Olav Torvund skal ha permisjon fra stillingen sin i to år for å prøve ut advo- katlivet, er altså antallet professorer ved SERI som før.

Ved utløpet av året hadde vi 15 eksternt finansierte prosjekter i aktivt arbeid. Det er vanlig at flere medarbeidere samarbeider om slike prosjekter. I tillegg kommer en lang rekke mindre prosjekter i form av artikler og annet fors- kningsarbeid som fast ansatte utfører innenfor rammene av normal arbeidstid.

Særlig er vi fornøyd med at fire av prosjektene er EU-prosjekter som gir oss anledning til å utvide og utdype det internasjonale forskningssamarbeidet.

Fra året som har gått kan vi også se tilbake på en rekke faglige arrangementer og publikasjoner. Særlig er det morsomt med bokutgivelser på internasjonale forlag som Emily M. Weitzenboecks bok «A Legal Framework for Emerging Business Models: Dynamic Networks as Collaborative Contracts»

som denne høsten er utgitt på Edward Elgar Publishing. Vi er også veldig glade for boken til Tommy Tranvik og Rolf Sture Normann om «Personvern og informasjonssikkerhet i kommunen. En håndbok i risikovurdering»

(Kommuneforlaget). Boken er i stor grad basert på prosjektet Personvernskolen som fremdeles er i arbeid. På arrangementssiden har eForvaltningskonferan- sen, Personvernkonferansen, seminaret om Ny æra for personvernet og sym- posiet i Internet governance prosjektet vært blant høydepunktene. Bare disse arrangementene har samlet mer enn 400 deltakere. I tillegg kommer en lang rekke andre seminarer vi har invitert til i løpet av året.

Bokutgivelser og arrangementer viser den store vekten vi legger på formid- ling. Denne lille juleboken er uttrykk for samme ambisjon: Årets Yulex viser noe av bredden i den aktuelle forskningen ved SERI. Jeg håper leserne vil finne stoff som pirrer nysgjerrigheten og skaper interesse for forskningen ved SERI i 2013.

God jul og godt nytt år!

Dag Wiese Schartum

(4)

PREFACE

2012 has been a good year. Particularly gratifying is the fact that this year two PhD-students started to work on their theses. Kevin McGillivray’s topic is

“Cloud computing — the use of contracts as a means of governing networked computer services”. Darren Read will write about network neutrality. At the same time as we are wishing these two promising researchers good luck, we also extend our warm congratulations to dr. scient Arild Jansen on the occa- sion of his promotion to professorship. This means that the number of profes- sors at the NRCCL still is three, even though Professor Olav Torvund will be on leave from his position for two years to try out life as solicitor.

By the end of 2012, fifteen externally funded projects were under active work at the NRCCL. In addition, various other projects are carried out by staff in permanent positions. All together our research activity has left us very satisfied. We are particularly happy that four of our projects are financed by the European Union under FP7, something which gives us an excellent opportunity to extend and deepen international research collaboration.

Looking back on the past year, several conferences, seminars and publications have stood out. Particularly noteworthy is international publications, for example Emily M. Weitzenboeck’s book “A Legal Framework for Emerging Business Models: Dynamic Networks as Collaborative Contracts” (available from Edward Elgar Publishing this autumn). We are also particularly pleased that Tommy Tranvik’s and Rolf Sture Normann’s book on privacy and information security with emphasis on risk assessment was published this autumn (“Personvern og informasjonssikkerhet i kommunen. En håndbok i risikovurdering” (Kommuneforlaget)). The book is to a large extent written on the basis of our project “The Privacy School” [Personvernskolen] which is still under active work. All together, the three largest conferences held by the NRCCL in 2012 (on data protection and e-government) gathered more than 400 people. A very successful international symposium on Internet Governance and various other seminars and workshops completes the picture of a rather active research environment.

Book publications as well as seminars and conferences show the great emphasis we at the NRCCL put on communicate the results of our research. This small Christmas book expresses that same ambition: Yulex 2012 shows some of the breadth of current research of our centre. I hope readers will find that the contributions will stimulate curiosity and create interest for next year’s research at the NRCCL.

Merry Christmas and Happy New Year!

Dag Wiese Schartum

(5)

INNHOLD

Forord ...3 Preface ...4

Med blikket mot Brussel

Helge M. Sønneland ...7 A Legal Framework for Emerging Business Models: Dynamic

Networks as Collaborative Contracts

Emily M. Weitzenboeck ...15 The understanding of ICTs in public sector

and its impact on governance

Arild Jansen ...37 Network Neutrality

Darren Read ...55 Anticipating Conflict – An Evaluation

of the New gTLD Dispute Resolution System

Kevin McGillivray ...91 Om forholdet mellom forvaltningslover og tilknyttede skjemaer

Dag Wiese Schartum ...121 Running out of address space: the Depletion of IPv4 address

and what it entails for Developing Countries

Samson Yoseph Esayas ...139 New Top-Level Domains and Legal Risks

Tobias Mahler ...163 Feltteknologi – oppbygning, funksjonalitet og bruksområder

Tommy Tranvik ...187

… and still we are left wanting

Emily M. Weitzenboeck ...201

(6)

(7)

MED BLIKKET MOT BRUSSEL

¹

Fellesskapspatent: så nært, men dog så fjernt? Aktuelle immaterialretts-saker i EU

Helge M. Sønneland

I første halvår 2012 og helt frem til EU-ferien 1. august er det blitt tatt nye initiativ med tilknytning til EUs såkalte digitale agenda. Først om to saker på immaterialrettsområdet; «hitteverk» og fellesskapspatent:

I juni lyktes det danske formannskap med å oppnå enighet mellom Rådet, Parlamentet og Kommisjonen om teksten til et direktiv om «hitteverk»( verk hvis opphavsmann enten ikke er kjent eller ikke kan oppspores), som vil gjøre det enklere for museer, arkiv og bibliotek å klarere rettigheter for digital tilgjengelig- gjøring av materiale i samlingene.² Det formelle vedtak ble truffet 25. oktober.

På toppmøtet få dager før EU-formannskapet ble overtatt av Kypros 1. juli, så det ut til at også en annen topp-prioritert sak på Kommisjonens dagsorden omsider hadde blitt løst, nemlig etablering av et felleskapspatent i EU. Men den gang ei; selv om topplederne hadde funnet et kompromiss i spørsmålet om hvor den europeiske patentdomstolen skal ligge, kom det få dager senere fram at kompromisset var supplert med en endring i domstolsforordningen som Parlament og Råd var blitt enige om før årsskiftet 2011/2012. Endringen i forordningen, som kom etter britisk press, innebar at en henvisning til EU- domstolen ble fjernet. Patentdomstolen underlegges dermed ikke EU-domstolen og skal heller ikke kunne forelegge spørsmål for EU-domstolen. Parlamentet reagerte sterkt negativt utsatte avstemningen om saken. EU-kommisjonen tok forbehold. Med hensyn til om denne endringen i forordningen gjør at den er i strid med EU-retten (noe Kommisjonens juridiske tjeneste antar den nå er) – jfr her at EU-domstolen underkjente den første planen fordi den ikke bygget på at EU-domstolen er øverste juridiske instans.

1 Denne artikkelen er en oppdatert versjon av en artikkel i Lov & Data sept.2012

2 Direktiv 2012/28/EU, publisert i Official Journal of the European Union 27.oktober 2012 ( L 299 /6)

(8)

8 Helge M. Sønneland

Da danskene overtok formannskapet var det tilsynelatende enighet mellom Kommisjonen, Parlamentet og alle de 25 landene som deltok i det forsterkede samarbeid om denne saken (Spania og Italia deltar ikke, fordi de er uenige i språkløsningen ), bortsett fra på ett punkt, nemlig om plassering av hovedkvar- teret for patentdomstolen. Riktignok hadde man plassert et meklingsinstitutt i Ljubljana og en voldgiftsdomstol i Lisboa samt ankedomstolen i Luxemburg, men for hovedsetet var både München og London kandidater. Det polske formannskapet foreslo i desember 2011 Paris som kompromisskandidat. Det falt ikke i god jord verken i Tyskland eller England. Saken var deretter fastlåst fram til toppmøtet i juni i år. Kompromisset som ble bekjentgjort med stolthet etter toppmøtet i juni, etablerer domstolen i alle de i tre byene: Hovedsetet etableres i Paris ( og domstolens første president skal være fra Frankrike), London får en seksjon som behandler alle saker vedrørende kjemikalier og far- masøytiske produkter og München får en seksjon som behandler saker relatert til teknologi («engineering») og mekanikk.

I løpet av fjoråret ble det som kjent oppnådd enighet om hvordan fellesskapspatent etableres (man bygger på avgjørelser fra det Europeiske Patentkontor i München, og patenter som gis av kontoret kan gis fellesskapsvirkning) og om språkspørsmål: søknad om patent kan leveres på ethvert språk, men må foreligge på ett av EPOs arbeidsspråk fransk, tysk eller engelsk. Patentkravet oversettes til de to andre språkene. For søknader fra deltakende EU-land vil EU subsidiere oversettelser. Etter hvert regner man med at det for informa- sjonsformål vil bli foretatt maskinoversettelser til alle deltakende lands språk.

Enigheten gjelder også økonomiske spørsmål, herunder hvordan midler fra EPO skal kunne overføres til drift av nasjonale patentkontorer.

Også for norske bedrifter vil det være en klar fordel å kunne søke et fellesskapspatent, i stedet for å måtte søke beskyttelse i hvert enkelt land. Men for å få patentbeskyttelse i Norge vil det stadig gjelde at det må søkes om patent hos norske myndigheter, idet domstolsordningen i EU ikke vil kunne gjelde oss.

EU-kommisjonen er fortsatt optimistisk mht til at det kan oppnås enighet innen utgangen av 2012. Idet redaksjonen av Yulex 2012 avsluttes (26.

november) ser det ut til at Kommisjonens optimisme er velbegrunnet. Fra Ministerrådets faste representanter (Coreper) foreligger et utkast til kompromiss. Kompromisset har fått betinget tilslutning fra EU-parlamentets juridiske komite. Dersom Konkurranse-ministerrådet på sitt møte 10.desember stemmer for kompromissforslaget vil den juridiske komiteen behandle saken den 11.desember, og saken kan behandles i plenum i parlamentet 21.desember. Kompromisset innebærer at forholdet mellom patent-domstolen og Den Europeiske Domstolen reguleres i den mellomstatlige traktaten, og ikke i forordningen om fellesskapspatentet. Kommisjonens vurderer kompromisset til å være i samsvar med EU-retten.

(9)

Med blikket mot Brussel 9 Dersom kompromisset blir vedtatt i Råd og Parlament, vil den mellomstatlige avtalen som etablerer patentdomstolen bli undertegnet 18. februar 2013.

Denne må så ratifiseres av det enkelte land. Hvis dette tidsskjemaet holder, vil det første felleskapspatentet kunne bli tildelt i april 2014, etter mer enn 30 års arbeid.

«Hitteverk»-direktiv

Den enighet som danskene oppnådde i Råd og EUparlamentet om teksten i et nytt direktiv om «hitteverk» (Orphan works ), innebar at det var tilstrekkelig med én behandling i EU-parlamentet. Direktivet ble vedtatt 25.oktober og publisert 27.oktober. Direktivet må gjennomføres i de enkelte medlemsland innen 29.oktober 2014. Direktivet er EØS-relevant, og vil bli tatt inn i EØS-avtalen.

Direktivet angir hvordan arkiv, museer og bibliotek som ønsker å tilgjenge- liggjøre materiale i sine samlinger i digital form, kan klarere rett til dette når det er tale om et «hitteverk». Institusjonene må gjennomføre et grundig søk etter opphavsmannen, og – om vedkommende ikke finnes – legge informasjon om verket og søket i en database som vil bli etablert i OHIM i Alicante.

Verket vil da være et «hitteverk» i alle medlemsland, og være klarert for grenseoverskridende digital bruk, for eksempel i portalen Europeana, hvor EU har satset stort for gjøre tilgjengelig europeisk kulturarv i digital form. Det skal betales vederlag for bruken, enten i forkant eller i etterkant, avhengig av hva medlemslandene bestemmer. Opphavsmannen kan til enhver tid bringe

«hitteverk»-statusen til opphør. I motsetning til da direktivet ble lagt fram av Kommisjonen, erkjennes det at det er tale om et unntak fra enerettene til opphavsmenn.

Det lyktes det danske formannskap og våre øvrige nordiske EU-medlemsland å få inn et helt avgjørende punkt i direktivteksten, nemlig at direktivet er uten innvirkning på ordninger for klarering av rettigheter som finnes i medlemsland, slik som avtalelisens-bestemmelser (Artikkel 1 pkt. 5 og fortalens punkt 24).

Det er min vurdering at dette direktivet ikke vil ha spesielt stor betydning, og særlig ikke for massedigitalisering; hovedsaken for kulturverninstitusjoner er at forholdene legges til rette for klarering av rettigheter generelt. Der har vi i de nordiske land nettopp avtalelisens-ordningene til disposisjon, hvor en kol- lektiv avtale mellom rettighetshavere (for eksempel representert ved Kopinor) og en bruker (for eksempel Nasjonalbiblioteket) utvides til å gjelde også ikke-

(10)

medlemmers rettigheter av tilsvarende art. Men for enkelte mindre samlinger kan direktivet by på nødvendige løsninger.

Nytt direktivforslag om forvaltning av rettigheter og musikk on-line

11 juli la Kommisjonen (sterkt forsinket) fram et forslag om regler som skal gjelde for selskap som forvalter opphavsrettigheter og nærstående rettigheter, som f.eks. TONO og Kopinor her i landet.³ Kommisjonen forutsetter at direktivet er EØS-relevant. Direktivet tar også sikte på å gjøre det enklere å klarere rettigheter i musikkverk for on-linebruk på tvers av landegrensene i Europa.

Leverandører av musikktjenester har klaget over at rettighetene til å gjøre musikkverk tilgjengelig i Europa må klareres land for land. Kommisjonen legger opp til at noen selskaper vil samle repertoar- portefølje for europeisk distribu- sjon, og foreslår at selskaper som tilbyr dette eller ønsker å tilby dette, ikke kan nekte å påta seg å representere også andre selskapers repertoar, dersom et selskap ber om dette. Rettighetshavere skal stå fritt til å velge hvem som skal forvalte deres rettigheter.

For alle forvaltningsselskaper, uansett hvilke typer rettigheter eller vederlag de forvalter, skal det gjelde visse felles regler som skal sikre innsyn både i regnskaper og utbetaling av vederlag, samt medlemmene deltakelse i vik- tige beslutninger. Kommisjonen mener den har sett eksempler på at vederlag forvaltes uforsvarlig, kostbart og lite effektivt. For selskaper som forvalter musikkrettigheter for grenseoverskridende bruk vil det i tillegg gjelde spesielle regler som skal sikre brukere enkel oversikt over hvilket repertoar selskapet har. Bl.a. stilles det omfattende krav om kapasitet for databehandling.

For kringkastingsselskapers bruk av musikk – også on-line – gjøres det unntak, slik at tidligere ordninger med avtaler mellom selskapene om gjensidig forvaltning kan opprettholdes, såfremt de ikke strider mot konkurransereglene.

Direktivet vurderer bruk av avtalelisens som løsning for tilgjengeliggjøring av musikk over grensene, men avskriver dette som en ordning som gir usik- kerhet med hensyn til hvem som er representert (Kommisjonen forutsetter at rettighetshavere må kunne trekke seg ut av ordningen ).

Direktivet forutsetter at medlemslandene etablerer meklingsordninger, både mellom rettighetshavere og selskapene og mellom selskapene og brukere.

I konflikter med brukere skal meklingsordningen gjelde både tariffspørsmål og eventuell nektelse av å inngå avtale. Det er uklart hvor langt forslaget går på

3 Com (2012)372/2

(11)

Med blikket mot Brussel 11 dette punkt, om det for eksempel gjelder tvungen voldgift, og om det i sin tur kan lede til en de facto tvangslisensiering.

Kommisjonen tar i direktivforslaget utgangspunkt i at selskaper som forvalter opphavsrettigheter omfattes av tjeneste-direktivet⁴. Denne forståelsen av direktivet vil nok bli bestridt i de nordiske land, og kan bli et viktig punkt i de videre forhandlingene i Råd og Parlament. (Etter tjenestedirektivet kan det ikke stilles krav om godkjenningsordninger av tjenesteytere. Direktivet gjelder imidlertid ikke opphavsrettigheter, og ved gjennomføringen av tjenestedirektivet ble det i både Danmark og Norge lagt til grunn at direktivet heller ikke omfatter forvaltning av opphavsrettigheter .Både Danmark og Norge krever godkjenning av forvaltningsorganisasjoner som skal kunne inngå avtaler som utløser avtalelisens ).

Direktivforslaget er svært detaljert, og bl.a. fra svensk hold er det hevdet at direktivet strider mot både subsidiaritets- og proporsjonalitetsprinsippet, m.a.o. at det regulerer forhold på EU-nivå som bedre kan løses på nasjonalt nivå, og at det er for detaljert.

De generelle krav som direktivforslaget stiller er særlig på ett punkt stikk i strid med de nordiske avtalelisensordningene: Direktivforslaget stiller nemlig krav om at rettighetshavere på forhånd og skriftlig må godkjenne at deres rettigheter forvaltes av forvaltningsorganisasjonen. Avtalelisensmodellen er jo som kjent kjennetegnet ved at avtalen med en representativ organisasjon ved lov utstrekkes til å gjelde ikke-medlemmer, og at fordeling av vederlag skjer i etterhånd.

Kommisjonen har i møte med EFTAs ekspertgruppe for immaterialrett gitt uttrykk for at det ikke har vært meningen å ødelegge de nordiske ordningene.

For at dette skal bli den endelige løsning må det da gjøres unntak i direktivteksten, f.eks. ved at det tas inn en tekst på linje med den som er tatt inn i

«hitteverks»-direktivet, og som gjør unntak avtalelisensordningene.

Håndheving av rettigheter

Håndheving av rettigheter er et sensitivt område, og etter å ha lidd nederlag i EU-parlamentet i spørsmålet om ratifisering av ACTA (Traktat om bekjem- pelse av forfalskninger) på forsommeren, utviser Kommisjonen varsomhet i behandlingen av håndhevingsspørsmål.

I løpet av våren ble det enighet om å flytte Observatoriet for pirateri og forfalskninger fra Brussel til Kontoret for harmonisering i det indre marked

4 Direktiv 2006/123/EC

(12)

– OHIM – i Alicante, og finansiere det med overskuddsmidler fra varemerke- registreringen. Observatoriet, som har fått navnet Observatoriet for immateri- alrettskrenkelser – vil bli bygget ut. Norge har observatørplass.⁵

ACTA, som ble forhandlet fram mellom EU-kommisjonen og flere indus- trialiserte land, bl.a. USA, Canada, Australia, Syd-Korea, Japan og Sveits, var sett på med mistro allerede før teksten ble fremlagt, og motstanden tiltok ut- over våren. Det ble bl.a. hevdet at personvernet til internettbrukere kunne stå i fare. EU-kommisjonen ønsket at EU-domstolen fikk seg forelagt traktat- teksten, for å kunne bekrefte at teksten ikke inneholdt annet og mer enn det som EU-lovgivningen allerede inneholder. Men, EU-parlamentet var ikke villig til å vente på domstolens vurdering og sa 4. juli nei til traktaten. Det er for meg ikke lett å lese ut disse farene av traktat-teksten – og det sier vel sitt at USA for sin del ikke mente det var nødvendig å legge saken fram for Kongressen for å kunne gi sin tilslutning – men det er ikke vanskelig å gi tilslutning til at saken ikke ble godt håndtert.

Det har vært drøftet om direktivet om håndhevelse av immaterialrettigheter – IPRED ⁶ – burde revideres. Kommisjonen har arrangert konferanser om saken, og er kommet til at den vil bygge videre på gjeldende tekst, med erfarings- utveksling mellom medlemslandene.(Direktivet anses ikke som EØS-relevant).

Kommisjonen sendte i slutten av juli ut et spørreskjema om økt nettverks- og informasjonssikkerhet⁷. Det var åpent for innspill om erfaringer og forslag til mulige tiltak fram til 15. oktober. Et hovedspørsmål gjelder forståelsen av e-handelsdirektivets bestemmelser om at datalagringsverter må aksjonere når det varsles om at de håndterer ulovlig innhold, det som tidligere ble kalt «notice and take-down», nå «notice and action». De aktuelle bestemmelsene er forstått ulikt i medlemslandene. Kommisjonen har også på dette punkt sagt at de ikke ser det som nødvendig å endre teksten i direktivet – og dermed åpne for forhandlinger –, men at de vil komme med klargjøring av gjeldende tekst på grunnlag av høringen.

Nettnøytralitet

I slutten av juli la Kommisjonen også fram til høring spørsmål om nettnøytra- litet⁸ – transparens og trafikkhåndtering i nettet. Kommisjonen ber om innspill

5 For informasjon se Kommisjonens hjemmeside Internal market/Intelletual property/enforcement 6 Com (2004)48/EC

7 Europalov.no/node/5680) 8 Europalov.no/node/5681)

(13)

Med blikket mot Brussel 13 mht om tiltak er nødvendige for å beholde internettets åpne og nøytrale ka- rakter, og for å gjøre det enkelt å bytte leverandør. Kommisjonen tar sikte på å legge fram en anbefaling neste år. Høringen i denne saken ble også avsluttet 15. oktober

(14)

(15)

A LEGAL FRAMEWORK FOR EMERGING BUSINESS MODELS: DYNAMIC NETWORKS AS COLLABORATIVE CONTRACTS

EXTRACT FROM CHAPTER 1 “INTRODUCTION”

¹

Emily M. Weitzenboeck

1 Introduction

1.1 New organizational forms — the business reality

The growth of information and communications technology (ICT) — not least the Internet — has fostered the development of new forms of entrepreneurial cooperation such as dynamic networks. Although we have seen the merger of large multinational companies in the latter part of the 1990s, an interesting counter-phenomenon in the last two decades has been the disintegration of a number of large corporations and the growth of dynamic networks. Many large companies are re-organizing into smaller units, focusing on their core competencies and finding it cheaper to outsource certain areas of business than to keep them in-house. As explained by the economic theory of transaction costs,² when it is cheaper to conduct transactions internally within the boun- daries of the company, organizations grow larger, but when it is cheaper to conduct them externally with independent entities in the open market, organizations stay small or shrink. With the widespread use of ICT and the easy and cheap access to digital communications, information can be shared instantly and inexpensively among many people in diverse locations and thus, the value of centralized decision-making and expensive bureaucracies (both features of the large corporation) decreases.

1 Edward Elgar Publishing, 2012, Cheltenham, UK; Northampton, MA, USA (363 pages). The book is available at: http://www.e-elgar.com/Bookentry_Main.lasso?id=14895

2 R Coase, ‘The nature of the firm’, (1937) 4 Economica 386–405.

(16)

16 Emily M. Weitzenboeck

Two different types of networked organizations between independent firms may be identified: stable and dynamic. A stable network employs partial outsourcing and is established to inject flexibility into the value chain. Assets are owned by several firms but dedicated to a particular business. Very often, a set of vendors is nestled around a large core firm, either providing inputs to the firm or distributing its outputs.³ Asset ownership and risk are spread across independent firms. However, in bad times, the core firm may have to protect the smaller ‘family members’.⁴ Although stability brings with it the benefits of dependability of supply or distribution, close cooperation on scheduling and quality requirements, it also has disadvantages of mutual dependence and some loss of flexibility.⁵ A typical example of a stable network is a supply chain.

On the other hand there are dynamic networks where anyone, from small and medium businesses including freelancers, link up together or with larger businesses, forming networks that are able to adapt relentlessly and respond quickly to business opportunities in the market. Businesses, irrespective of size but depending on their core competency, team up with other businesses to carry out a business project together. Once this is completed, the temporary network is disbanded but some of the individual participants would, in future, come together again to work on new projects where their special competence is required. This form of network has emerged in response to faster-paced or discontinuous competitive environments.⁶ In the words of Manuel Castells,

‘the actual operating unit becomes the business project, enacted by a net- work, rather than individual companies or formal groupings of companies’

[his emphasis].⁷ Dynamic networks vary in shape and form, ranging from (i) spontaneous virtual enterprises, (ii) virtual enterprises that are quickly created out of a pre-established pool of firms, to (iii) those networks dominated by a lead partner where there is extensive outsourcing. These are more extensively explained below in section 1.3.

The above two types of network organizations are networks between independent business firms. However, a network organization may also arise with- in a business organization — what Snow, Miles and Coleman call an internal network.⁸ An internal network is created when a firm’s component functions

3 CC Snow, RE Miles and HJ Coleman Jr, ‘Managing 21^st century network organizations’

(1992) 20 (3) Organizational Dynamics 5, 13.

4 Ibid, 14.

5 See further on this, with detailed examples of stable networks like General Motors and BMW, ibid, 13–14.

6 Ibid, 14.

7 M Castells, ‘The Rise of the Network Society’ (The Information Age: Economy, Society and Culture, vol I, 2^nd edn, Blackwell Publishing, 2000) 177.

8 Snow, Miles and Coleman (n 2), 13.

(17)

A Legal Framework for Emerging Business Models 17 are structured into different business units, with each unit focusing on one area of competence or expertise. A business unit or division would thus become the expert within the business network at providing its specific product or service and would cooperate with the other units in the business network whenever appropriate. From a legal point of view, an internal network would typically be formed either as one independent legal person structured in different business units, or as a parent company with different business units or divisions organized as subsidiary companies.

The focus of this book is on dynamic networks.

1.2 Dynamic networks

In a seminal article published in 1986, economists Miles and Snow intuited the development of what they called ‘a new organizational form’ in response to the new competitive environment of that decade which saw an increased use of joint ventures, subcontracting and licensing activities.⁹ They called this organization a dynamic network ‘to suggest that its major components can be assembled and reassembled in order to meet complex and changing competitive conditions’.¹⁰ They identified the following characteristics of the dynamic network:

• Vertical Disaggregation: Certain business functions such as manufacturing, marketing and distribution are no longer performed in-house within a single organization but are farmed out to independent organizations within a network. Firms thus focus on their core competence and other business functions are performed by other firms within the network.

• Brokers: Since the abovementioned business functions are not necessarily part of a single organization, the individual firms (or components) of the dynamic network are assembled by or located through a broker. Brokers may have different roles ranging from playing a lead role and subcontracting for required services, to assisting in identifying potential partners.

• Market Mechanisms: It is market mechanisms rather than plans and con- trols that hold together the major business functions. ‘Contracts and payment for results are used more frequently than progress reports and perso- nal supervision.’¹¹

9 RE Miles and CC Snow, ‘Organizations: new concepts for new forms’ (1986) 28 (3) California Management Review reprinted in PJ Buckley and J Michie (eds), Firms, Organizations and Contracts (Oxford University Press, 1996).

10 Ibid, 432.

11 Ibid.

(18)

• Full-Disclosure Information Systems: ‘Broad-access computerized infor- mation systems are used as substitutes for lengthy trust-building proces- ses based on experience. Participants in the network agree on a general structure of payment for value added and then hook themselves together in a continuously updated information system so that contributions can be mutually and instantaneously verified.’¹²[/list]

Miles and Snow highlight two different perspectives of the dynamic network: the level of each individual component and the network as a whole. From the perspective of the individual participant, the primary benefit for participating in the network is the opportunity to pursue its distinctive competence. Each network component can be seen as complementing rather than competing with the other components. From the perspective of the network as a whole, each firm’s distinctive competence is not only enhanced by participation in the network but is held in check by its fellow network members. This means that if a particular member performs poorly or somehow takes unfair advantage of another component, then it can be removed from the network due to the independence (or modularity) that allows the network to reshape itself when necessary.¹³

In a subsequent article, Snow, Miles and Coleman clarify further their notion of dynamic networks.¹⁴ These are businesses which ‘have pushed the network form to the apparent limits of its capabilities’ by outsourcing extensively.¹⁵ What happens is that a lead firm identifies and assembles assets owned largely, or even entirely, by other companies. Such lead firms typically rely on a core skill or, in some cases, pure brokering. The advantage of dynamic networks, these authors explain further, is that they can provide both specialization and flexibility. The downside, however, is that dynamic networks

‘run the risk of quality variation across firms, of needed expertise being tem- porarily unavailable, and of possible exploitation of proprietary knowledge or technology’.¹⁶ Thus, they hold that the dynamic network operates best in competitive situations where there are myriad players, each guided by market pressures to be reliable and to stay at the leading edge of its speciality.¹⁷

Since Miles and Snow’s seminal article, other configurations of dynamic networks have emerged in practice. Business and management literature describe examples of spontaneous and temporary dynamic networks termed

12 Ibid.

13 Ibid, 432–3.

15 Ibid.

16 Ibid.

17 Ibid.

(19)

A Legal Framework for Emerging Business Models 19

‘virtual enterprises’. Another model of dynamic networks is that of virtual enterprises that are quickly formed out of pre-established enterprise pools or clusters. These are examined in more detail in the next section.

1.3 Types of dynamic networks

The focus of this book is dynamic networks. Many terms have been used and proposed in literature, particularly in business and management literature, to describe these novel forms of networked organizations or certain aspects or variants of them. Besides ‘dynamic network’, other terms like network enterprise, smart organization, virtual organization, virtual enterprise, virtual company and virtual corporation have been used with some of them achieving the dubious status of buzzwords for certain periods. These other terms are examined in section 1.7.3 below.

The term used in this book to describe these new forms of entrepreneurial organization is dynamic networks. This is also the terminology used by Miles, Snow and Coleman.¹⁸ To clarify what is meant by this term, a categorization of dynamic networks is proposed. Such a categorization is also useful and helpful in the analysis of contractual and partnership law issues undertaken in this book.

One may identify three different models of dynamic networks.

1.3.1 Spontaneous and temporary virtual enterprises

These are dynamic networks where anyone — from freelancers and small firms to larger companies or partnerships — may collaborate and participate, mostly through ICT, in small to large, temporary networks of tens, hundreds and even thousands, of people. In practice, a spontaneous and temporary virtual enterprise is initiated by an individual or a firm that identifies a business opportunity which it is unable to address alone since it lacks some essential competence or competences. The firm or individual therefore looks for other individuals or firms that have the necessary competence(s) or else identifies such firms or individuals with the help of a third-party broker. Each participant brings its core competence to this temporary organization that will exist until the project that brings the network together is completed. On project completion, the temporary network is disbanded but the individual participants may, in future, come together again to work on new projects where

18 Miles and Snow (n 8); Snow, Miles and Coleman (n 2).

(20)

their special competence is required. Through such collaboration, small and medium-sized enterprises (SMEs) pool together their resources and expertise, thus becoming capable of offering a common service to the customer that each of them individually would not otherwise have been in a position to do.

Information and communication technologies usually facilitate the interaction and collaboration between the parties, and may sometimes also form the back- bone of the collaboration.¹⁹ The term ‘virtual enterprise’ is examined in further detail in section 1.7.3.

A documented example of this type of dynamic network is the 1996 Atlanta Olympics, also known as the ‘Virtual Olympics’. The idea to bring the Olympics to Altanta first occurred to Billy Payne and became a reality when, through private support and without governmental aid, Atlanta won the bid.²⁰ Payne remained as the head of the Atlanta Committee for the Olympic Games (ACOG), serving as the chief administrator to organize the Olympics. He secured funding from private banks²¹ and sponsorships from firms such as CocaCola, Home Depot, UPS and Delta Air Lines. The ACOG sold the US te- levision rights to NBC for $456 million and sold engraved bricks to the public for $35 each to help defray building costs. The funding was also to be used to help it organize and manage the Games. By July 1996, when the Games officially opened in Atlanta, Payne’s virtual enterprise was supervising 88,209 workers for an approximate one-month interval. With the close of the Games, this virtual enterprise and its entire staff vanished as the business opportunity had by then disappeared.

1.3.2 Enterprise pools and virtual enterprises formed out of such pools

In practice, businesses like to collaborate in business ventures with other firms or individuals that they trust. It may therefore be difficult, if not unrealistic, to expect firms, especially SMEs, to enter into business ventures with parties that they do not know, have never heard of before and whose reputation they are unable to verify. For these fluid, temporary networks to work, there should be

19 One example of the latter is where the parties communicate and work through an e-platform such as Webcorp that was developed for the Virtuelle Fabrik. Another example is the software tool developed by and for VirtuellBau to help develop a solution for their customer. See further Chapter 2.

20 The story of the Atlanta Virtual Olympics of 1996 and the facts stated here are taken from AE Conaway Stilson, ‘The agile virtual corporation’ (1997) 22 Delaware Journal of Corporate Law 502–5.

21 The ACOG secured a $300 million line of credit from NationsBank and an $8 million line of credit from Atlanta banks — an impressive feat considering that the ACOG had no assets.

See further Conaway Stilson (n 19), 504.

(21)

A Legal Framework for Emerging Business Models 21 an underlying basis of trust between the individual participants that together form the dynamic network.

One manner in which this need has been addressed is by the establishment of relatively stable, long-term oriented pools of firms or enterprises. These enterprise pools are usually set up at the initiative of one or more persons

— either individuals or firms — and are made up of different parties with different core competencies who are capable of and interested in collaborating with each other in future projects or business ventures. By joining such an enterprise pool, a firm signals its long-term interest in future collaboration with the other firms in the pool. When one of the members of this pool identifies a business opportunity, a subset of these firms can be quickly selected to form a virtual enterprise. Such an enterprise pool thus acts as a breeding ground²² for the fast establishment of virtual enterprises to react quickly to the market opportunity, thereby achieving a competitive edge.

These pools therefore act as a sort of controlled environment for the establishment of dynamic networks and any virtual enterprises formed out of them.

In order to join such a pool, a firm would have to meet certain basic criteria such as having a particular core competency and a good business reputation.

To remain a member of such a pool, it would have to satisfy other requirements such as establishing and maintaining a good track record when collaborating with other parties in business dealings, loyalty to the pool, and so on. Such pools are thus a mechanism which enables, maintains and fosters trust between future participants in a dynamic networked organization. They provide a trust framework by setting up a number of basic ‘rules of the game’

for successful collaboration between the participants. These ‘rules of the game’

may take various forms and are usually meant to be binding on the parties.

They will be further examined in Chapter 3.²³

A case in point is Virtuelle Fabrik, a network consisting in turn of three networks of small and medium independent businesses in the electrical, electronic and mechanical market spread around three geographical areas in Germany (Baden-Würtenberg) and Switzerland (respectively Lake Constance and north-west Switzerland). Each of the three networks has its own website (which also has links to the other networks) that advertises the network’s competencies and members.²⁴ Upon a specific order from the customer, members of a network having the required skills are selected from a competence database and brought together as a virtual enterprise to carry out that parti-

22 The term ‘virtual breeding environment’ was popularized by ECOLEAD, a project funded by the European Community.

23 See, in particular, section 3.3.

24 See Chapter 2, section 2.2.1.

(22)

cular project. All the parties communicate with each other through a common Internet-based electronic platform (that is password protected and open only to network members).

1.3.3 Long-term dynamic networks with a lead partner

Another manifestation of a dynamic network is where a firm (the lead firm) keeps its core business functions such as product design and development, marketing and finance in-house but assigns the remaining business functions to other firms, which activities are coordinated by the lead firm. According to Snow, Miles and Coleman these lead firms usually rely on a core skill such as manufacturing (e.g. Motorola), research and development and design (e.g.

Reebok), design and assembly (e.g. Dell Computer) or, in some cases, pure brokering.²⁵ The parties in such a network are in continuous contact through the latest information and communications technologies. The lead firm acts as coordinator of the various dealings between suppliers, customers and other service providers who join together their core competence to manufacture a product. Very often the firms remain in various ways linked with the lead firm even after a project would have been terminated. Thus, this type of dynamic network is based on a longer-termed cooperation and is likely to have a more rigid form than enterprises formed through a pool as mentioned in the previ- ous section because the participant firms are not so easily interchangeable.²⁶ The term ‘longer-termed’ here is not meant to imply collaborations lasting over several decades,²⁷ but is used to contrast these networks from the usually short-term virtual enterprises mentioned above.²⁸ This type of dynamic network fits the description of the dynamic network identified by Miles and Snow, as discussed above (section 1.2). Indeed, I hold that a main characteristic of this category of dynamic networks is that the lead partner owns or controls the brand of the product or service provided by the dynamic network, and that, indeed, the dynamic network revolves around this brand.

26 See further on this KW Lange, Virtuelle Unternehmen: neue Unternehmenskoordination in Recht und Praxis (Verlag Recht und Wirtschaft GmbH, 2001) 59.

27 Though there is nothing forbidding long-term arrangements between a firm and the lead firm from also falling within this category of dynamic network, if the other elements of this category also subsist.

28 Lange uses a similar adjective (dauerhafte i.e. long-term) to describe this category of dynamic networks. He calls them dauerhafte Virtuelle Unternehmen mit Zentrale (which can be loosely translated as long-term virtual enterprises with a lead partner). See Lange (n 25), 58–60.

(23)

A Legal Framework for Emerging Business Models 23 A classic example of such dynamic networks is Dell Computers. Dell takes orders online through its website which allows its clients to customize their product. It relies heavily on a network of suppliers which receives orders online and supplies directly to Dell’s buyers. Overall, about 50 per cent of Dell’s orders are processed through the web, without direct contact with Dell’s managers.²⁹

Another example described by Castells³⁰ as being potentially the network enterprise par excellance is Cisco Systems. The core of its operation is its website from which prospective customers can select products and make orders online. These are then automatically transferred to Cisco’s network of suppliers who are also connected online. Products are shipped directly to customers by the manufacturers. Cisco is thus an example of a manufacturing company which does almost no manufacturing itself.

1.4 Background: trends of organizational evolution

The shift to such dynamic forms of networked organizations has not happened overnight. In the last half-century, one can identify what Castells calls different

‘trends of organizational evolution’³¹ starting from the transition from mass production to flexible production.³² As Castells explains, standardized products were mass produced through assembly-line-based machines, enabling corporations at the beginning of the last century to achieve huge economies of scale.³³ Such corporations were large, vertically integrated, with rigid structures for the division of labour which led to the development of bureaucracies within and between the different management and manufacturing levels of the corporation. Eventually, technological change rendered single-purpose production equipment obsolete and more costly to operate. The trend started shifting towards more flexible forms of production, either in the form of flexible specialization such as occurred in the northern Italian industrial districts where industrial craft and customized production by small and medium-sized firms flourished or in the form of dynamic flexibility also known as high- volume flexible production which enabled economies of scale and customized,

29 Castells (n 6), 182–3.

30 Ibid, 180–4.

31 Castells (n 6), 166.

32 Section 1.4 is based on Castells (n 6), 166–80.

33 Castells (n 6), 166.

(24)

reprogrammable production systems that are more sensitive to variations in the market.

Another distinct trend identified by Castells is the crisis of the large corporation and the resilience of small and medium firms as agents of innovation and sources of job creation. Indeed, SMEs play a central role in the European economy. In the enlarged European Union of 27 countries, some 23 million SMEs provide around 75 million jobs and represent 99 per cent of all enterprises.³⁴ However, some authors are sceptical about the flexibility and economic viability of SMEs, holding that these are often dependent on collaboration with large corporations and thereby under their financial, commercial and technological control.³⁵ However, as Castells explains, small and medium-sized businesses are well adapted to the flexible production system of the informational economy, although their renewed dynamism comes under the control of large corporations.³⁶ Concomitant with the rise of small and medium firms is what has been described as the crisis of the large corporation. However, as Castells puts it, we are not witnessing the death of the large corporation but rather a crisis of the traditional corporate model of organization based on vertical integration and hierarchical management with strict technical and social divisions of labour.³⁷ As a consequence, many corporations are changing their organizational model and becoming horizontal corporations:

‘[t]o be able to internalize the benefits of network flexibility the corporation had to become a network itself and dynamize [sic] each element of its internal structure: this is in essence the meaning and the purpose of the ‘horizontal corporation’ model.’³⁸

New methods of management such as ‘just in time’ production, total quality control of products in the production process to eliminate defects, and workers’ involvement in the production process through teamwork, are another development mentioned by Castells.³⁹

34 See European Commission, The New SME Definition: User Guide and Model Declaration (EU Enterprise and Industry publication 2005) 5; European Commission, ‘Commission staff working document on the implementation of Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises’ SEC (2009) 1350, 2.

35 See, for example, B Harrison, Lean and Mean: The Changing Landscape of Corporate Power in the Age of Flexibility (Basic Books, 1994).

36 Castells (n 6), 168.

37 Ibid.

38 Ibid, 176.

39 Ibid, 169.

(25)

A Legal Framework for Emerging Business Models 25 Two other significant forms of organizational flexibility are characterized by inter-firm networking: networks among SMEs and the licensing-subcontracting model of production under an umbrella corporation.⁴⁰ The classic examples of networks among SMEs are the industrial districts in northern Italy characterized by networking relationships among small firms that have established niche markets for certain products. For example Carpi and Prato have become well known for textiles, Arzignano for leather goods and Sassuolo for ceramic tiles. Sometimes the network is structured differently through the use of subcontracting or franchising by a core corporation to individual firms that are often in different locations. Indeed these franchising networks have proli- ferated in the last two decades with activities ranging fromfast food to car hire to the prêt à porter clothing business, to name just a few.

A sixth organizational pattern identified by Castells is the intertwining of large corporations or what is commonly known as strategic alliances among large firms.⁴¹ Such alliances enable them to cooperate on certain areas such as research and development or certain aspects of their business, although the alliance firms compete in areas not covered by the alliance. A well-known example of strategic alliances is the Star Alliance⁴² between large airlines like Scandinavian Airlines, Lufthansa and United Airlines, or the SkyTeam alliance between, inter alia, KLM and Delta Air Lines,⁴³ where airlines combine flights (and consequently an increased occupancy level of their fleet), and are able to offer more service points for alliance customers in airports.

The corporation has thus changed its organizational model to adapt to the conditions of unpredictability brought about by economic and technological change. The main shift is from the vertical bureaucratic corporation to the horizontal corporation⁴⁴ where the business itself becomes a network in order to be able to internalize the benefits of network flexibility. Castells describes it as the rise of business networks, ‘[n]etworks are the fundamental stuff of which new organizations are and will be made’.⁴⁵ [his emphasis]

As Castells explains, it is important to note that the abovementioned different trends are relatively independent of each other.⁴⁶ The formation of subcontracting networks is different from the formation of horizontal networks of small and medium businesses. The web-like structure of strategic alliances

40 Ibid, 172.

41 Ibid, 174.

42 <www.staralliance.com> accessed 15 February 2012.

43 See further <http://www.klm.com/travel/gb_en/about/company/skyteam_partners/index.

htm> accessed 15 February 2012.

44 Castells (n 6),176.

45 Ibid, 180.

46 Ibid, 178.

(26)

between large businesses is different from the shift towards the horizontal corporation.⁴⁷ As Castells notes:

‘… these various trends interact with each other, influence each other, but are all different dimensions of a fundamental process: the process of disintegration of the organizational model of vertical, rational bureaucracies, characteristic of the large corporation under the conditions of standardized mass production and oligopolistic markets.’⁴⁸

Castells, like Miles and Snow before him, also sees ‘a new organizational form’

that has emerged as characteristic of today’s informational, global economy.⁴⁹ Castells calls it ‘the network enterprise’ and sees its emergence as a result of the interaction between organizational crisis and change and new information technologies. Although organizational change and evolution happened in response to the need to cope with a constantly changing operational environment and independently of technological change, as Castells explains,[y]

et, on ce it started to take place, the feasibility of organizational change was extraordinarily enhanced by new information technologies’.⁵⁰

Thus, the shift to dynamic forms of networked organizations was accelera- ted exponentially by the growth and widespread penetration of ICT.⁵¹

‘The ability of small and medium businesses to link up in networks among themselves and with large corporations also became dependent on the availability of new technologies, once the networks’ horizons (if not their daily operations) became global.’⁵²

The components of the network are both autonomous and dependent vis-à-vis the network, and may be a part of other networks.

47 Ibid.

48 Ibid, 179.

49 Ibid, 187.

50 Ibid, 185.

51 Castells refers to Bar and Borrus’ research which has shown that information networking technology jumped by a quantum leap in the early 1990s, due to the convergence of three trends: digitization of the telecommunications network, development of broadband transmis- sion, and a dramatic increase in the performance of computers connected by the network, a performance which had been determined by technological breakthrough in micro-electronics and software (Castells (n 6), 186). Indeed, the role of computerized information systems was mentioned by Miles and Snow in their 1986 article as one of the characteristics of the dynamic network.

52 Castells (n 6), 185.

(27)

A Legal Framework for Emerging Business Models 27

‘The performance of a given network will then depend on two fundamental attributes of the network: its connectedness, that is, its structural ability to facilitate noise-free communication between its components; and its consistency, that is, the extent to which there is a sharing of interests between the network’s goals and the goals of its components.’⁵³

1.5 Aim, orientation and outline of this book

One issue that kept reappearing during my research was the reluctance expressed by a number of businesses to set up dynamic networks by using one of the traditional corporate or partnership forms such as a limited liability company or a limited partnership. Dissatisfaction with the traditional, established corporate and partnership forms has also been expressed by some legal scholars such as Cevenini⁵⁴ and Van Schoubroeck et al,⁵⁵ with the main criticism being that the legal formalities required to set up one of these established corporate and partnership forms run counter to the need for flexibility and temporari- ness of certain dynamic networks like virtual enterprises and would, indeed, stifle such collaborative networks.

Nevertheless, it is also a fact that even if contractual parties have expressly excluded the operation of corporate or partnership law, in a number of jurisdictions certain provisions of the default national partnership law regime could still apply in certain situations.

In the absence of a choice by the network parties of one of the established legal forms — whether corporate or partnership — the fallback position is usually the use of a contract or of a network of contracts. However, even here, it became obvious that the contracts used by these dynamic networks are something other than the typically antagonistic discrete contracts of classical contract law. They are collaborative contracts and more, as is explained further in this book.

This book is not a treatise on legal issues surrounding virtual enterprises.

Instead, it uses the different types of dynamic networks discussed above in section 1.3, including but not limited to virtual enterprises, to examine whether

53 Ibid, 187.

54 C Cevenini, Virtual Enterprises: Legal Issues of the On-line Collaboration between Undertakings (Giuffrè Editore 2003) 123–78.

55 See Van Schoubroeck et al, Virtual Enterprise Legal Issue Taxonomy (2001) EU ALIVE project deliverable, Report D03, 13–19 <http://www.kuleuven.be/ve/> accessed 15 February 2012.

(28)

and how contract and partnership law regulate and cope with such networks.

In other words, how far is contract a useful and flexible tool to regulate such new phenomena? When do default rules of national partnership law apply and, so to speak, override the wishes of the contracting parties? These novel organizational forms are thus used to illuminate and illustrate the main legal discussion in this book, that is, the relative utility of contract and partnership law in fostering and supporting emerging business models.

A number of case studies of dynamic networks which are used as empirical background for and throughout this book are examined in Chapter 2.

The precontractual stage and its different phases is examined in Chapter 3.

The focus is on the role of enterprise pools as well as the stage from when a market opportunity is identified up to the moment that a virtual enterprise is formed out of members in an enterprise pool. Chapter 4 examines basic questions of contract law such as: the notion of contract, why parties use contract as a regulatory tool, and the different types and theories of contract, i.e. from the classical notion of the adversarial discrete contract, to the neoclassical notion of contract, to the view of contract as a collaborative and relational one.

The internal relationship between the participants in dynamic networks during the operative phase of such networks is the theme of Chapter 5. The legal framework of dynamic networks is examined and the focus then turns to the nature of the relationship between the members in such networks, in particular during the performance stage.

Chapter 6 examines some basic questions of partnership law such as: the consequences and effect of the application of overriding partnership law to relationships that parties had intended to set up as ‘merely’ contractual, and the standard of behaviour required of partners in a partnership. Moreover, dynamic networks are not only created through the use of one multilateral contract. Very often, there is a series of contracts behind or underlying such complex networks. The notion of contractual networks is therefore also extre- mely relevant and is the subject of Chapter 7.

There is an abundance of literature on traditional contract law issues and, similarly, on company law and partnership law. To give an example of this with reference to English law, treatises on contract law include classics like those by Treitel,⁵⁶ Chitty,⁵⁷ Cheshire, Fifoot and Furmston⁵⁸ and Atiyah⁵⁹ re-

56 E Peel, Treitel: The Law of Contract (13^th edn, Sweet & Maxwell, 2011).

57 Beale HG (gen. ed.), Chitty on Contracts, vol 1, General Principles (including 3^rd cumulative supplement of 2011, 30^th edn, Sweet & Maxwell, 2008).

58 M Furmston, Cheshire, Fifoot & Furmston’s Law of Contract (15^th edn, Oxford University Press, 2007).

59 SA Smith, Atiyah’s Introduction to the Law of Contract (6^th edn, Clarendon Press, 2005).

(29)

A Legal Framework for Emerging Business Models 29 spectively, to mention just some, and treatises on partnership law and/or company law include those by Morse,⁶⁰ Gower⁶¹ and Farrar⁶² respectively. This book does not attempt to regurgitate what has been so ably discussed by these eminent writers. What this book does, however, is to focus on that area where contract and partnership law intersect, that is where these disciplines overlap.

It seeks to examine the reason for this overlap which, very often, is because one discipline supplements or ‘fills in gaps’ left blank by the other. There is a dearth of legal literature on this, though there appears to be growing interest in this area, again in works on networks.⁶³ This book seeks to contribute in- sight into this little explored area of law.

There is some literature on company law as a contract law discipline, but this has been mainly centred on issues such as the use of a shareholders agre- ement and the nature of promises to issue shares — issues which are not central to this book.⁶⁴

A closely related question, which plays a central role in this book, is the behaviour of the parties in the dynamic networks studied in this book. An important characteristic of dynamic networks is the underlying basis of trust between the firms forming part of the network. Trust plays an important role at all stages — from the precontractual stage where a dynamic network such as a virtual enterprise is being set up, to the performance stage, once it has been set up. Although trust per se is not a legal concept, as is more extensively discussed in Chapter 3, an important behavioural criterion in civil law countries is the requirement that contracts be negotiated and performed in good faith.

Notions of good faith in contract performance have also appeared in common law jurisdictions, with the notable exception of English law. However, the concept of good faith has different nuances depending on the jurisdiction, the legal culture and even the legal relationship — contract or organizational form

60 G Morse, Partnership Law (7^th edn, Oxford University Press, 2010).

61 PL Davies, Gower and Davies’ Principles of Modern Company Law (8^th edn, Sweet &

Maxwell, 2008).

62 JH Farrar and B Hannigan, Farrar’s Company Law (4^th edn, Butterworths, 1998).

63 See, for example, F Cafaggi, Reti di imprese tra regolazione e norme sociali: Nuove sfide per diritto ed economia (il Mulina 2004); F Cafaggi, ‘Contractual networks and the Small Business Act: towards European principles?’ (2008) EUI Law Working Paper 2008/15, European University Institute < http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1156839> accessed 15 February 2012; G Teubner, ‘Coincidentia oppositorium: Hybrid networks beyond contract and organisation’ in M Armstutz and G Teubner (eds), Networks: Legal Issues of Multilateral Co-operation (Hart Publishing, 2009); G Teubner, Networks as Connected Contracts (edited with Introduction by H Collins, M Everson tr, Hart Publishing, 2011).

64 See, for example, J Giertsen, ‘Company law as a contract law discipline’ in K Engsig Sørensen and M Neville (eds), The Regulation of Companies: A Tribute to Paul Krüger Andersen (Forlaget Thomson, 2003).

(30)

— concerned. Its scope varies, depending on whether the contract under exa- mination is an adversarial spot-market contract, a collaborative contract or a fiduciary one. Good faith can also come in different ‘guises’ such as fiduciary duties in both partnership and company law. The notion of good faith and its various nuances, as a behavioural criterion in contractual and partnership relations, is an important and recurring theme which is discussed and probed in a large part of this book, namely from Chapters 3 to 7.

It should also be highlighted that the focus of this book is on private law issues, namely contract and partnership/company law issues that arise between dynamic networks that carry out an economic activity. Public law issues such as administrative law issues, public procurement and private-public partnerships are not per se the focus of this study.⁶⁵

1.5.1 Hybrids, collaborative contracts and more

In the field of law and economics, there is a growing literature on certain types of business relations which do not fit neatly into the legal classifica- tion of either contract or partnership/company and which have been called

‘networks’⁶⁶ or ‘hybrids’.⁶⁷ As elaborated further below, the term ‘network’ is not a legal concept⁶⁸ but a sociological one.⁶⁹ Its meaning ranges from a group of people who meet for social and contact-building purposes, to a loose or more complex collaboration between firms in a particular business field, and it also includes the legal notion of a group of (parent-subsidiary) companies (an internal network).

65 As some of the case studies show, many clusters are created through support from public funding and some of them continue to receive partial public funding for a while. It is beyond the scope of this book to look at the public law aspects in the structure of such clusters.

66 See WW Powell, ‘Neither market nor hierarchy: network forms of organization’ (1990) 12 Research in Organizational Behaviour 295–336.

67 See for example OE Williamson, The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting (The Free Press – Macmillian, Inc, 1985); for a legal discussion of the concept see E Schanze, ‘Symbiotic contracts: exploring long-term agency structures between contract and corporation’ in C Joerges (ed.), Franchising and the Law: Theroritical and Comparative Approaches in Europe and the United States (Nomos Verlagsgesellschaft, 1991); E Schanze, ‘Beyond contract and corporation: the law and economics of symbiotic arrangements’ in T Riis and R Nielsen (eds), Law and Economics: Methodology and Application (DjØf Publishing, 1998); F Cafaggi (n 62); G Teubner (n 62).

68 The assertion that ‘“Network” is not a legal concept’ has been affirmed by other legal scholars such as Schanze, ‘Beyond contract and corporation’ (n 66) and Teubner, Networks as Connected Contracts (n 62).

69 See, for example, Castells (n 6) and Powell (n 65).